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Estimating

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KBR Onshore Estimating


Agenda
Organization
Company Policies & Procedures for Estimating
Classes of Estimates
Estimate Class by Technology
Numbers of Estimates
Estimating Programs
Estimating Databases
Estimating Process
Frequently Asked Questions
Estimating Initiatives - The Future

Estimating Organization
Total Employees: 55
MWKL
Graham Jefford

Disciplines
C/S/A Paul Porter
E/I
Robert Hodge
MECH John Shipman
PIPE
Richard Morrow

Specialists
Constr. Dennis Thompson
HOS
Rick Barrett
Icarus
Art Byram
Systems Leo Ney

Product Lines
Ammonia
Don Vichi
LNG
Bob Pike
Power
Jim Isenberger
Spec. Chem/P&P Wayne Fultz
Oil & Gas
Ed Wirt
Olefins
Tommy Newlin
Refinery Roy Mewis

Company Policies & Procedures


Estimating
CP&P 2501 - Types and classes of
estimates.
CP&P 2502 - Estimate execution plan and
Basis of estimate.
CP&P 2503 - Contingency/Risk Analysis
CP&P 2504 - Operations Review
requirements

Class of Estimates
Classification

Name

Order of Magnitude
FEL Phase: Conceptual

Factored
FEL Phase: Feasibility

Conceptually Defined
FEL Phase: Definition

Definitive

Cost Curves
(* HP&P)
Capacity Ratios
(* HP&P)

Equipment Factored
(* HP&P ie Lang, Gutherie)
Parametric
(*HP&P- unit costs and ratios)
Volumetric Model
(ICARUS)
Detailed Conceptual
(conceptual bulk MTO)
Historical/Ref. Design Model
(bulk adjusted)

Expected Accuracy
+/- 30-50 %

Usage
Studies, viability evaluation of alternate
schemes, project screening, long range
planning

FEL: +/- 40%

+/- 15- 25 %

0-3 %
FEL : 1 %

Strategic planning, feasibility, budget


approval, comparisons, indicative costs

FEL : +/- 25%

+/- 10-15 %

Project Definition

3-10 %

FEL : 5 %

First check, control estimate to monitor


costs, bidding, funding

10-50 %
FEL : 20-30 %

FEL : +/- 10%

Defined
(definitive bulk MTO)
Historical/Ref. Design Model
(line item adjusted)

+/- 5- 10 %

FCE : 10-30 %

Production check estimate final control


baseline, bidding, bid checking, supplier
negotiation support, claims and dispute
resolution

50-100 %
PCE : 60-90 %
Note:
Construction
0 to 50%
complete

* HP&P:

Historical, Proprietary and /or Published data.

Classification:

Identification of the type of estimate to be prepared.

Name:

Identification of the different methods of preparing estimates.

Expected Accuracy:

Typical low and high ranges after the application of contingency (if contingency is required to arrive at the most probable cost). Ranges are based on
the actual cost being between the bounds of these ranges (on 85% of the estimates).

Usage:

Typically (but not limited to) the end use of the estimate.

Project Definition:

This is expressed as a percentage and correlates to the percent of design that is typically complete based on deliverables produced.

Cost-Influence Curve
Contract
Award

Construction
Start

Construction

100%

Mechanical
Completion

Craft Labor

90%
80%

Construction Indirects and Equipment


Temp Facilities and Utilities

70%

100%
90%
80%
70%

60%

60%

Bulk Materials

50%

50%

40%

40%

30%

30%

20%

20%

Major Equipment

10%

10%

Preliminary Project and


Process Development

0%
0%

5%

10%

Detail Design

15% 20% 25%

FCE
OM Factor

30% 35% 40% 45% 50%

55% 60% 65% 70%

Percent of Project Time Span

Conceptual Defined Estimates

0%
75% 80% 85% 90% 95% 100%

PCE

Definitive Estimates

Variance

Estimate Class by Technology

Estimates - Year 2002 to Date


(Working Toward +/- 550 Estimates)

Def initive (70)


14%
Conceptually
Def ined (105)
21%

Order of
Magnitude
(115)
23%

Factored
(210)
42%

Estimating Programs
ESP
Discipline Programs
CMCS Download
Program Steel/Concrete
CAPS (Computer Aided Piping System)
Estelec (E & I)
Estequip
Home Office (H-12 including other masks)

Estimating Programs contd.


Factored / Model Programs
Parametric Estimating
ICARUS
Capcost
Risk Analysis : @ Risk/Crystal Ball
Historical Databases

ESP
(Estimating Summarizing Program)

Database System (MS Access) with Excel


Input Front-end
Electronically Feeds T10, IPMS, HCMS,
ACLS, Primavera and Historical Database
Imports from Icarus, Estimating Discipline
programs, and Engineering Programs
Allows for Development of Quantities using
Percentages (ie. Grout, Testing, Freight,
OH&I, and many others)

ESP contd.
(Estimating Summarizing Program)

Auditable Factoring Table


Currency Conversions
Unit of Measure Conversions
Standardized Reports

Estimating Databases

Completed Estimate database (Over 600 Loaded)


Final Job database (75 jobs loaded)
Home Office database (650 Actual and Estimates)
Equipment database (loaded our first 7,000 pieces
of equipment)

Estimating Databases contd.


Database Uses:
Generate Estimates
Reviewing Estimates
Provide Benchmarking Information to
Management and Clients

Screen-shot of Actual Database

Screen-shot of Actual Database

Other Estimating Factors


Factors to be considered:
Climate
Labor Productivity
Labor Availability
Project Location
Completeness of Plans and Specs
Government Regulations

Other Estimating Factors contd.


Factors to be considered:
Contract Type
Work-hours
Congestion
Existing Facility
Client and degree of involvement

Estimate Process
Request for Estimate

Manager assigns
Project Estimator
Review Info/Package

Project Estimator to:


Contact Project Manager and determine
requirements
Contact Construction, Procurement, and
Engineering
Establish critical cut-off dates for quantities
and Engineering Review
Establish deliverables
Prepare Estimate Execution Plan and
Strategy
Review Histories for comparisons
Attend Proposal/Project Team Kick-off
meeting
Request Estimating Team

Kick off
Meeting
with
Engineers

Estimating Team to:


Mobilize to Work Cell
and assist with Qtys

Note: Engineering maybe KBR or 3rd Party

Project Estimator to:


Develop Home Office &
Construction OHI
Estimates
Estimating Team to:
Attend Internal Estimate
Kickoff meeting
Read Specs /Study Dwgs
Prepare List of Quals
Review Execution Plan
Prepare Packages to Go
out for Bids
Assist Procurement with
Pricing Solicitation
Evaluate Construction
Labor
Attend weekly status
meeting

Assemble Estimate;
Perform Risk
Analysis with input
from all parties

Estimate Process contd.


Review Cycle:
Engineering
Estimating-Chief/Mgr
Construction

Load Database
Conduct Lessons
Learned

Unsuccessful
Bid

Bid or
Check
Estimate

Project Team
KBR OPS
Pricing/Executive Management
Client

Successful
Bid

Check Estimate

Load Project
Controls Systems

Conduct Turnover
meeting
Load Project
Controls Systems

Project ABC Task Force


Proposal Team Input
Construction

Client and
Other Input

Project
Estimator

Engineering
Project Controls
Procurement
Management

Lead C/S/A
Estimator

Lead Piping
Estimator

Lead E/I
Estimator

Lead Mechanical
Estimator

Home Office
Support
Discipline Chief
Estimators
KBR Systems

Yellow indicates part of work-cell


C/S/A = Civil/Structural/Architectural
E/I = Electrical/Instrumentation

Bulk Material MTO Standards


Piping
Fittings & Flanges
Small Bore Pipe & Valves
Hangers & Supports
Testing
Specialty & Materials
Radiographic Inspection
Concrete
Rebar
Formwork
Anchor Bolts
Embeds
Excavation & Backfill

Electrical/Instrument
-Conduit Fittings
-Stands & Mounts
-Process Hookups/Tubing
-Terminations
-Loops
-Wire/Cable Lengths
Steel
-Connections
-Misc. Platforms
Grout
Paint

Frequently Asked Questions

Do I Need An Estimate Execution


Plan?
YES, It Should include:
Scope of work
Documentation basis
Type and accuracy of the estimate
Costing basis for categories of cost
Basis of design
Responsibilities

Do I Need An Estimate Execution


Plan? contd.
YES, It Should include:
Level of detail
Special/Client format and Work
Breakdown Structure requirements
Sales tax, escalated basis, currency
conversions to be used
Special/Contractual requirements
Estimate schedule
MTO plan

Do I Need An Estimate Execution


Plan? contd.
YES, It Should include:
Construction strategy
Subcontract strategy
Scope or cost comparisons required

Do I Need an OPS Review?


For All
Proposals,
Projects,
and Studies
Estimates
Reimbursable
Fixed Price
(Lump Sum)
Non-Binding
Capital Costs
Change Notices
Reimbursable
& X-No.'s
Fixed Price
(Lump Sum)

Project
Director

VP PM

$250 K
All
All

Other
Sr. VP EPC
VP's/Directors/Managers Operations
(Formal Operations
review required)

$ 1 MM
All

$10 MM
$ 1 MM

All At discretion of VP-Project


Management

Area Sales
VP/Director
(Review Only)

$20 MM
$5 MM

All
All

$100 MM

All

$500 K

$1 MM

$10 MM

$20 MM

---

$250 K

$250 K

$ 1 MM

$5 MM

---

What is Included in OPS?


Project Overview
Scope of Work.
Key Milestone Dates.
Competition.
Project Viability.
Contract Summary.
Summary of the Proposal/Project Strategy.

What is Included in OPS? contd.


Project Execution.
Estimate Philosophy & Methodology.
Basis of Estimate
Estimate Review including
Comparative Data from similar
projects.
Contingency Recommendation.

What is Included in OPS? contd.


Commercial Issues (Cashflow,
Currency)
Contract Risk including Funded
Liability

Who Attends OPS?


Proposal/Project Manager
Project Controls Manager/Management
Project Estimator
Vice President, Project Execution
Engineering
Construction
Plant Services representative (if applicable)

Who Attends OPS? contd.


Procurement
Technology Acquisition and Development
representative, when appropriate
Manager, Estimating
Proposals
Financial representative

Estimate Definitions
Funded Liability - (Only recommended by
Operations) Includes: Liquidated Damages
for schedule risk, Cost of Money and
Financial Risks, Warrantees, Contract Risk,
etc.
Cost vs. Price - The OPS review and the
OPS team establish what the Cost of the
project can be executed for. The Pricing
Committee will decide the Selling Price.

Estimate Definitions contd.


Design Allowance - An allowance for the
normal growth of quantities as design
evolves, based on the quantification
method. Includes labor, materials, and
subcontracts.
Construction Practices Allowance - An
allowance for the normal waste due to
appropriate construction methods. (ie.
Concrete Overpour, Drops of Conduit and
Cable, etc.)

Estimate Definitions contd.


Initial Budget - As bid and
approved. Bid Estimate may require
modifications to be used as a Control
Budget
First Check Estimate - Engineering
at 30% complete
Production Check Estimate Engineering at 70% complete

Engineering Quantity Review (Say-Back)


Estimating reviews quantities with engineering
to ensure scope coverage.
Quantities should be given to Engineering 24
hours in advance.
A general meeting should be conducted to kick
off the review.
Each discipline then pairs up and goes off to
review their items.

Engineering Quantity Review (Say-Back)


They return to a general meeting to share
items discovered, ie. Piping found more
quantity not picked up and therefore more
steel may be required to support it.
Takes place prior to Estimating internal
review.

Estimating Initiatives - The Future


Better Co-ordination with Engineering in Scoping and
Quantity Generation
Better Co-ordination with Construction on
Productivities and Overheads
New reports for the Four Databases
Develop an Electronic Interface for Future Project
Actuals (working with Cost)
Include Job Comparisons and Benchmarking in ESP
Continue to Improve our Conceptual Estimating
Techniques and Use of Icarus

Turn Over Meeting


Takes place after successful award of
a job.
Includes PM, PE, Procurement,
Construction, and Project Controls.
Estimating takes the execution team
through all the philosophies of the
estimate. May take place by discipline
and may last 1 to 2 days depending on
project size and complexity.

Estimatings Best Practice no longer


utilizes this previously accepted
method.